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tv   Squawk on the Street  CNBC  November 21, 2013 9:00am-12:01pm EST

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>> we are ready for it to come back full force in terms of we have plenty of tvs ready to be tuned. >> thank you. >> thanks for having me. >> it was very interesting. that does it for us today. make sure you join us tomorrow. right now it is time for "squawk on the street." >> welcome to "squawk on the street". first breaking news on the treasury and gm. >> thanks, carl. treasury anticipates exiting the controversial general motors investment. it will do so by the end of 2013. it's launching its plan to sell the remaining 31.1 million gm shares. it has recouped about 39 billion from the 49 billion it invested. that would be at today's share price if it sold the shares for 1.1 billion dollar gain.
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it is announcing that it sold the last 70 million shares that it announced a couple of weeks ago. finally with all said and done would recoup about $431 billion of the 421. that is about a 10 billion dollar gain on all other things out there. so i guess bringing history to an end here where treasury will leave or exit the general motors once the biggest auto maker in america. certainly one of the biggest. >> certainly profitable as they point out, talking about 340,000 new auto jobs created for gm. thank you, steve. >> be careful. the stock that is not much of an overhang. a lot of people knew this. going for the job saying this is happening. those are taking it.
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you won't see it last a day unless the futures go up. gm doing better in europe and china. it is a good story. ford not going up since the -- the stock shouldn't be up at all. >> along with that a lot of retail numbers. shares of target are down sharply. discount retailer posting results below estimates siting delusion relating to the canadian segment where gross margins 13.8 versus 30%. >> it is the comp stores .9%. costco is .56. there is the halo. people want to give target the benefit of the doubt. you keep thinking this is going to be the breakout. the idea that we are going to
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wake up and target is going to be the same old target is not happening. it is a decent story, not a great story. i see no reason to buy or sell. >> you are neutral. >> when you have outfits like costco and williams sonoma i question why i have to own the stock. my travel i thought lowe's was terrible. expectations are always high for target which is why the stock fl fluctuates. i can't think of a worse business. >> this is second biggest retailer after wal-mart. the number of retailers have that been wins going into the holidays, macy's and depot. >> i give target. >> williams sonoma is really
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fabulous. they have terrific. they seem to have the right price point. >> you consider target a win going into the holidays? >> williams sonoma a win. tjx a win. >> inventory at target up 9%. we are going into the season with a lot of clothes on the racks. >> versus macy's. a lot of people continue to under estimate. i'm tired of them being under estimated. when do we recognize they are not as good as they used to be? are we afraid? do we like shopping there so much that we can't see it is not a great retailer? >> i am not sure what marks the point where you go from being great to not great. >> i think when you have comp store sales of .9%. >> what are you failing to do in terms of execution that you were doing previously? >> i think there was an excitement to target.
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>> i used to find it was the segment i get a five below where it is the merchandising. >> it is a recreational equipment. >> a little excitement and retail. that concept is -- >> it is cold weather a garb. >> you could have fooled me. >> that hamburger place. >> how about -- look at starbucks. they are doing plus seven. >> how about abercrombie. we are down 14. >> 69-year-old man trying to be a 23-year-old youth doesn't like people who are uncool. maybe there are not as many cool people as we thought. when you have the erosion he is talking about that means there are not as many cool people to pay for yourself. there are versions as someone
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who is a 58-year-old man. i went by the stores the other day and i find them pornographic. the pornography look is not selling. >> some have shown managers nibbling at the levels. >> maybe they are 13 year old managers. i think there is a core value of anything that can be destroyed. retail is a very funny game. you can miss a couple of quarters it is okay. you miss a couple of years and you are nowhere. >> you see guys where they see jeep. not because of experatize or retail. it is a different beast. we have seen that. difficult once you chase your customer away. >> i brought a lunch bag every day to school. it's called a -- it's one of his best customers.
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he has 10,000. they were the hottest things in philadelphia. next thing you know they are padlocked. retail you can go very, very wrong quickly. >> as pointed out inventories can be a key part of looking and watching because those can be next quarter's mark downs. sears inventories are declining. same store sales are always declining, as well. they did take the inventory down fairly significantly it appears. >> they launched adam levine and nicki minaj. they won't tell you what the product is. they lunched them. >> don't we have a connection with him? we ought to call him and see what he launched. >> sounds like a space ship. maybe they launched. >> eddie lambert is going to ipo
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nicki minaj and ipo craftsman. ipo the auto business. >> what are you left with? >> real estate, enormous value. that has long been -- the underlying value cited by those positive on this. >> after we pantsed them in home depot and everyone thought all of the rest of real estate -- he has done a great job. we don't need sears real estate. that is one of the problems. >> i asked you if you would rather buy j.c. penney or kohl's and you grimaced. target or wal-mart? >> i would rather buy target. i think target in the end, you wait a few days and people start liking it again.
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stock goes to 66. then we have announcement yesterday on air like -- it's the drosphelia? the may fly. that's what goes on in tech. i studied that. >> have i been pronouncing it wrong since i was 20 years old. maybe we are talking about two different things. >> life cycle of the fruit fly when it comes to tech. i think target you wait three days and someone says target -- wal-mart did it. look at how wal-mart bounced. how about if wal-mart said things are really bad? people are very forgiving. they will forgive target. if you ask me i will take target. >> futures are looking to bounce back after s&p first three day
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losing streaks in two months. dow below 16,000. speaking of the fed the senate banking committee is set to vote on whether to confirm janet yellen in about an hour from now. rubio apparently not on board. it is expected that the nomination is confirmed. in terms of the market david costen saying good chance of ten percent correction next year. the minutes gave people the spooks. >> if target says things are better and wal-mart says consumer is constrained. dollar tree consumer constrained do we presume consumer is doing well and immediately stop buying bonds. enterprise is largely international. american companies made glass for cars.
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now they make specialty polymers for the world. where is dupont's strength? united states? the world. maybe they are reading target's release. maybe bernanke shops at target and knows i have to be careful. maybe janet yellen shops at dollar tree. >> maybe she does. or maybe not. maybe she shops at five below. >> five below is a very hot concept. it is a regional national place in philadelphia. your kids will love what you get. it is fabulous. >> your point is a good one overall on the consumer. >> you can't be -- dollar tree is down. you know how much things cost at the dollar tree? you can get mike and ike for under dollar. >> with gas prices acting as they tail. some say it is underer played.
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>> it does fut a lot of money in people's pockets. dollar tree should not be missing the number. it is a very fine operating. >> so the fed did say in the minutes that they considered trimming purchases even before there was further unambiguous improvement in the labor market. >> right. >> can the reality of the consumer coexist as you see it right now? >> i think they have to play the game because you can't have people leaning on the bond market. they are always playing cat and mouse. bob reuben saying he was playing cat and mouse. i think the fed is being opaque here. after what they saw that september remember september head slam to the shorts. buernanke does not say i am goig to play the shorts.
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they have to play the game. that is the way to keep rates from three. >> look what existing homes did. >> what about municipalities? so many different things linked to low rates including the borrowing from the united states that you don't want to necessarily go down that road. normalize rates. we probably have a better economy and a little inflation. >> we need a dramatic repatriotuation program and get the money back in. 1.5 trillion and make a infrastructure fund. >> infrastructure bank. >> i'm not kidding. i'm offering my solution to the american people. >> that is something that has been around. it will never happen, of course. nothing will ever happen. it involved washington, d.c. and nothing will take place there. >> why can't someone bold stand up and say it? >> you are absolutely right. >> how about 20% and 5% goes to
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the infrastructure bank? >> you have to put people to work. >> we have the cocaine possession for the first time. >> wasn't toronto mayor, didn't he smoke crack? >> isn't that better? cocaine? i don't know the hierarchy of things that are dangerous. i can't get over the 13-year-old thong at abercrombie. "breaking bad" like a major distribution product -- >> what is apple doing? >> we used to talk about them all the time. i'm talking about granny smith. >> that is my favorite kind of apple. >> got much needed good news about model s. and another reason for him to smile this morning. business person of the year perhaps? we'll talk about that.
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teslagetting 99 out of 100,
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the highest customer satisfaction score seen in years. our phil lebeau caught up with the head of the administration yesterday. >> once we made the decision and once we talked to tesla about the decision they were more than open about saying we want the highest level of scrutiny and want to cooperate with you. they feel strongly about the quality and safety of the vehicles. they are willing to step forward and be collaborative is a very positive thing. >> see if they can get tesla out of the 120 range. >> barclay's thought there would be degradation of the sales. you mentioned it --
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>> fortunate magazine, business person of the year. >> it's a cold stock. when i say cold stock it is very difficult to value it. we talk about gm and the treasury selling shares. i can put a valuation on gm. >> can he go from 20 to 200? >> have the ability to manufacture that many batteries? >> that is an interesting question. he has been saying maybe he can do some things. henry ford we say there is no way to make the model as. >> you would say elon musk was crazy but he has a record of turning dreams into reality. he has been discounted for and sometimes with the help of subsidies.
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>> he is not delorean. >> speaking of cocaine. >> i think there is certainly -- i understand how it can happen. it does not make it less of a cold stock. >> there is the momentum where the momentum is broken. >> you remember cold stock has shorts who don't believe and people who love the product on the other side. the buyers love the product. the shorts can't understand the metric of how you get to that valuation. these guys duke it out every day here in the range. >> your plan on twitter was don't be ashamed of paying up for a cold name. >> kramer says this thing is worthless. i am saying it is overvalued. i don't believe in it. i didn't want you to buy twitter. you have every right to do it. i am not denying people's right to overpay. why are you chuckling.
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>> i am glad you are not denying rights. >> beasty boys. you have to fight for your right to overpay for cold stocks. >> you know where they went to school? st. anne. >> very interesting. very, very talented. >> she got rejected from every school she applied. probably the smartest person to graduate that year in the country. busy day today. senate banking, voting on yellen. there is a look at futures.
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opening bell. time for "mad dash" on thursday. this may be one of the funniest titles. >> i can't say the name of the research report. we have this hand held. >> i'm on this one right here. we are trying to show this is about fossil jet. people saying why did the company go from a billion to 600 million. you mentioned this thing. everyone things it should be
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higher. says the company sold three new 3 d printers in the third quarter. >> $600 million market value. >> they sold three printers and two used printers, too. >> absolutely. stratus is a real company. the problem is the group got inflated. citron said -- >> i want to know what they were really thinking. >> you have to give them credit. >> this is a cold stock. this is the definition of a cold stock. you may think it is jim jones and cyanide laced kool aid. >> another bit of a cold stock,
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green mountain. >> david will be on today. he did a stock dividend. now it is a closed system. my friend saying this once the smoke clears there were questions about whether it is good enough. in the meantime the longs are beating the shorts in green mountain coffee. did you use a cukeurig this morning? >> i did not. >> the number of keurig people in this country is so big that they have a small base that makes me feel like -- >> we use the cart. >> i use the guy outside. >> you're on broadway. we have the opening bell a couple of minutes away. stay with us here on "squawk on the street." [ male announcer ] once, there was a man
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who found a magic seashell. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being get live squawks right in your trading platform with think or swim from td ameritrade. you are watching cnbc's "squawk on the street" live from the opening bell. a lot of retail numbers and
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macrodata. the difference between the retail sales number and the individual numbers that don't square. >> this is what i struggle with. the numbers are much stronger than people think. you base it on target and home depot. you don't come off the strength. >> there is the opening bell. s&p at the top of the screen. more green than red at the open. down here at the big board. at the nasdaq microsoft celebrating the launch of the x box 1 on sale world wide at midnight. are you going to the party? >> i know game stop is down ahead. the device sounds very exciting. obviously that swan song that kind of crisis that he eluded to in the "wall street journal,"
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maybe should be a little more provide. it seemed like he was saying he is the pattern that is the problem. what does that say for other stocks? >> we are going to get a look at the x box in this program in a little bit. in the meantime "usa today" has a review. it is expensive. $499 is up there. the features make you feel like you stepped into the next generation when they work. there are tech issues that microsoft may have to handle. >> i thought voice activation is like the secret. apple had some of the technology from the x box. really kind of cool features. i'm not a gamer. i'm a gamer but not a gamer. and i just was fascinated by all of the things in this. and i understand the higher price. >> i'll tell you who is not a gamer is gme. >> i guess people feel like --
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apparently it is very hard to get a sony box. you can't get the sony -- sony misjudged. there is not enough inventory. she is looking for sony play stations and there is apparently not a lot available. >> among the other losers, dollar tree, target, dollar general. >> you want to taper in an environment and let's add wal-mart aren't doing well. isn't that where people shop? >> you have to taper sometime. taper is not tightening. >> taper is not a tightening. >> they have a delicate thing because of the shorts to lean on bonds. maybe the economy is not that strong. you don't have a lot of construction. we need that infrastructure. you have a lot of consumer save.
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>> you are talking qe forever. >> how does the market look? >> europe was turning. europe hit a pause button. >> france looks like another recession. >> china is okay. >> they did not have a great manufacturing number out of china. >> oil stopped going higher. oil international is more expensive than domestic. there are signs that things are not so great that i wouldn't be in a hurry to get out of this program because we all know what is looming which is a website that doesn't work to help us with health care. >> dr. oz, most powerful guy in medicine and a great guy did say if you want to know how to bankrupt, why most people suffer from bankruptcy is because of health care. this is going to be a worrisome thing for many people. they are not going to feel like
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shopping when they are worried about their health. >> good point. gm is up there. johnson controls, so is -- >> johnson controls announced a buyback of incredible proportions. a new ceo, very motivated to get the stock higher. i believe they will break up the company over time. that happens to be one of the most aggressive buybacks. >> yahoo cannot stop the beast at 36.47. >> there was another research report today. i think they raised their target. you are going back to the value of ali bahba. the increasing value of the
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stake in yahoo japan. they share a name and nothing else. that is a lot of the story. they sold 1.25 billion in a convertible instead of a billion. they did it very easily. there was great demand for that. so you just got a lot of positive things happening there in terms of the value of the company that has nothing to do with whether or not it will turn itself around. they have to look back at the sale they did initially before she came in. why did we sell that stake. at the time they were being urged to do it. that was a lot of money left on the table. >> given the hoard of stock and cash, does it matter if yahoo just treads water? >> good question. >> and the name that doesn't get tossed around a lot is terry simal who i think is mostly
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responsible for bringing that gift to mayer. >> hats off to them. this is one of the greatest performing stocks of the year. it is because it is all right that they go up. meanwhile, there are plenty of people who believe she will transition the company to a new future and a better one and therefore you should apply multiples to the core business. >> now it looks like maybe wasn't the best sale. >> other than i remember when the solar company was sold, it rarely happens how they can own something worth more than they are. we have seen it happen periodically. remember when palm went up? and we find these instances
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where there is a hidden asset. and it is huge. >> really quickly gap tonight. do you get in front of it given all we have heard from retail? >> i wrote off gap incorrectly and they revealed those good numbers before. gap is part of this new phenomenon of apparel doing better than we thought. abercrombie not doing better than we thought. macy's said it and j.c. penney. >> the time's home section about new yorkers who see their neighbors in the nude which can be an issue. one of our viewers says now we know why retail is not doing well because people are not wearing clothes. >> it is a plus if you live in a neighborhood where there is a lot of younger people. >> that is that porn theme you seem to always devolve in. >> you are the man who mentions the p. i talk about the beauty of the
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human body. >> i know it when i see it. >> there you go. the dow is up 60. >> i'm standing here waiting for navigator to open an ipo. i'm wondering whether the ipo market is topping out a bit. i was expecting five to price last night and trade today. i only got two of them. three have postponed. what happened? they don't issue a press release but they are all bio tech firms. i'm concerned that given the ocean of bio tech ipos that we have seen in the last six months maybe it has gotten too much. ipo market is very trendy. sectors get hot and then they stop getting hot. i will keep an eye on this. this is the first time i have seen a number of ipos. we are waiting for liquefied
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natural gas. that was the high end of the price range of 17 to 19. we did have another one very interesting company. they openedt at 15.50. they are open above the initial price there. they develop seeds for plants that make them more resistant to drought and pests. very big area to grow in. the markets moving in a very narrow range. generally volume much lower. looks like the buyers are a little bit exhausted. nobody is selling at all. a little while ago the only exception i see are in the high beta names and internet companies and the 3 d printers earlier. look at the high beta names, group on, yelps, those are the names where you have seen a lot more heavy volume and generally declining activity. that is something to watch. those are the ones you would watch for any kind of larger scale market decline.
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we were at 17.91. even a 5% decline would bring us to 17.91. that seems far away. even the tiniest of dips get met with buyers. trend still very much intact. did you see all down except for japan. it was up almost 2%. the head of the bank of japan talking very, very dovishly saying they think they may be able to hit inflation targets. they have been trying to reflate the economy and market responding to the concern. target was a disappointment here. abercrombie, same store sales guidance for the quarter seems to be a bit disappointing. williams sonoma raised the guidance but it is below the
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consensus. the other group getting hit this week are gold stocks. all the big gold names are down again today. still waiting for navigator to open. back to you. >> thanks very much. activism is the new mma. there is not a lot of deal making going on. what is keeping bankers and lawyers and companies and boards busy is activism. nobody keeps them busier than carl icon. he strikes again today on a company called ilogics. there is mr. ikahn. he takes a 12.6 position in the common stock. he files last night and follows up with a 13 b. he filed a form 4 but then it came out detailing the position. the company puts in a pill, 10%.
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that won't bar him from owning the 12.6%. this is a company that has not faired well in the acquisition strategy in the past. a couple of deals. they are thought to have overpaid perhaps for those deals. and they have a great deal of debt. you look at the market value but you have a lot of debt which makes the likelihood of overall sales of the company very low. what is he going to push for here other than a board seat or two? the nominating deadline is december 5. expect him to move rather quickly. usually alex used to put on a lot of the boards. he has his own funds. carl doesn't want to sit on as many boards as he wants did. here is rbc capital on the news this morning.
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they say we believe this can speed up the timeline of potential asset divestitures and debt pay down and could lead to more rapid departure of ceo or cfo or both. it is interesting that goes back to the original point. you do still have this fear on the part of ceos of doing a deal in which they get criticized for even when they watch prices react positively to deals we have seen so often in this environment. even though money is more or less free, no deals but a lot of activism. >> this is one of the great growth stocks of the early 2000s. everyone thought they were giving phillips and ge a run for their money in medtech. they lost their way. they made acquisitions to try to speed up the growth. i believe they did overpay. go back in time and you look
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there. a nice chart from '04. you see a stock that was the great stock. you see the acquisitions and the dips fail. so the market went bad. this was one of those vestinves daily stocks. >> we will expect a little fight for board seats. >> he sells the puts? >> they offset and creates the position. >> he owns common outright. did want to move on to another story. government rejecting fair home fund recapitalization proposal. obama administration adviser arguing the only way to revamp the home loan market is through what he calls rapid -- this is what he told us a week ago.
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>> we want to invest in the future. housing finance is most critical to the american dream and the government wants private capital to invest. we and other owners want to invest. so we are ready. americans want progress now so do owners. and we are ready. so let's move forward and let's do it. >> apparently the administration not ready to consider that kind of a plan in which they feel like you would still create a too big to fail entity that would have an implied government guarantee. we will see where we end up on this. we are coming close to the next payment where we will have taken in more than the $188 billion we spent to bail them out. >> was a good business. insurance business was good that they had. they bought a lot of stuff. they tried to compete against the banks. thin margins. >> i would say that senator
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corkern's office has done a lot of work. this is a momentum stock. and i thought that gene spurling from goldman sachs said you are barking up the wrong tree here. >> remember bill acman owns ten percent stake in those. >> thanks a lot. let's get to jackie deangeles and check out the action in energy. >> we are watching the crude futures this morning trading higher above $108 a barrel. traders are saying that october minutes yesterday that we got from the fed indicating that we could see a taper having no impact on the crude futures because it is nothing that they weren't really expectingism meantime we are watching nat gas
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today. traders are expecting a draw down of supplies of 40 billion cubic feet sending prices up today especially with cold temperatures out there. a quick check on gold a rough day for the precious medal after the fed released minutes yesterday. still to come this morning upping the ante in the video game consol wars. we talk with the microsoft executive in charge of x box 1 which goes on sale at midnight tonight. just by talking to a helmet. it grabbed the patient's record before we even picked him up.
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you want to make a statement about google? do you need a new tshirt? microsoft is selling shirts with the google logo and the tag line, keep calm while we steal your data, an attempt to highlight google's handling of user data. if a t shirt is not your style you can buy gloves, hats. >> i think the chrome is killing
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it. >> chrome became dominant. >> not like bing has had a picnic either. >> microsoft x box -- very complicated. >> the issues of privacy are important. and one wonders how they are going to play out over the long term and how they are going to impact the ability of corporations to make acquisit n acquisitions whether in telecommunications or other areas. people expect it to a certain extent. >> don't find any expectation of privacy anymore. i think you have to wake up to that. there is no expectation of privacy. >> even this set. >> not sure what that lady is selling. >> i'm not buying it. >> one thing about stocks here. dow up 52. highest in september. >> can't stabilize. got to be careful.
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i always use clorox as a measure. people want to short clorox and then you say hold up. waits go up and i thought they were going to go down. these are interesting breathing organisms. >> they are not. >> are you going to tell me -- >> you know where i am going. they are not people. they are not. >> made up of people. here is what is coming up next on "squawk on the street." coming up, investing in this market can be as scary as walking a tight rope. don't fear, cramer's here and he will get you started out on the right foot with six stocks in 60 seconds. life inspires your trading.50 tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action.
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six stocks in 60 seconds. >> real slow here. maybe finally off. >> on pioneer. >> the big switch out of the independence in our country and into exxon and chevron.
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>> new skin rang the bell. it is doing much better. >> don't worry about the k cup erosion. look at green mountain. >> deutsche initiates. >> it is not done. they were left for dead like best buy. when they are not dead they go higher. >> and i think this has been one of the red hot stocks. i have great confidence that this company will come back. we have clout. when you go out west you hear about the saps and oracles versus the cloud. you have pharmaceutical sales management. because i'm trying to do off the tape, this is a very hot one. trying to profile companies that one day could be the companies that you want to buy.
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i wish i had done the container store or potbelly. i'm trying to get in front. >> we'll see you tonight. once again coming up. >> we'll talk to the microsoft executive in charge of the rollout of the x box. we will watch janet yellen be nominated to be the next chairman of the federal reserve. and the co founder of buzz feed will join us live. over the next 40 years the united states population is going to grow by over 90 million people, and almost all that growth is going to be in cities. what's the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity? what we have found is that if that family is moved into safe, clean affordable housing, places that have access to great school systems, access to jobs and multiple transportation modes
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welcome back to "squawk on the street." we have breaking data in the form of philly fed business outlook. number at 6.5 must less than expected. we are expecting 15.0. last time we had 19.8. the stock market seems okay. they are a little afraid of a taper. they will blame it on probably the government slow down.
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yields came into this at 2.83. yields are going to go down a little bit. the notion of the steeper yield curve is as a pause. >> as the yields come in dow is at the high. this is a live shot of the senate banking committee in washington to vote on whether to send janet yellen's nomination for fed chair to the full senate. >> we are a full steps behind the senators have not yet sat at their seats in the hearing room. we expect the senate banking committee to vote to send janet yellen's nomination to be the next fed chairman of the reserve. we expect that vote in the next 15 minutes. all that is needed as far as the committees are concerned is a simple majority.
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there are 12 democrats and 12 republicans. it will be interesting to see how many republicans vote yes. senator said yesterday that he is supporting the nomination. other high profile republicans committed to supporting yellen. marco rubio says he will vote against yellen. also in the camp publicly so far john mccain, patrick toomey. when it gets to the full senate 60 votes are needed in the senate and then it is a simple majority for confirmation. and the timing, of course, of when the full senate will vote is very much up in the air. waiting for the senate banking committee to gavel proceedings to order. we expect the confirmation vote before the regular scheduled hearing. we will come back with an update
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as soon as that happens. more on janet yellen's nomination. along with data from senior economic supporter. >> i was trying to see what jim was talking about if there shutdown related commentary. this is an indication. we follow the philly fed as an indication of what is happening nationally. this decline is pretty broad based. the employment indexes crashed. there could be a shutdown related effect on this. 323,000. there is the ppi down .2 on the headline.
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the core ppi taking out food and energies up to .2 on the month. the good news for manufacturers and producers is input costs are down and help profit margins are not changing prices to consumers. that is something to watch is producer prices and the effect on profit margin. >> we keep hearing for a little inflation, please. in light of this morning's data and the senate vote set to take place on yellen. the markets are pushing higher. let's bring in the president and ceo of capital advisers. >> good to be here. >> those minutes gave investors a bit of a spook, the notion that the taper could be closer even as we try to separate the issue of a taper from actual
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rising rates. market vulnerable going into the end of the year? >> in terms of the end of the year it is hard to call. i think our attitude is increasingly becoming that the perspective returns on the stock market keep getting lower and lower. what is happening in the bond market is that rates are moving higher regardless of the commentary from the fed. you get around the 3% tenure that gives the opportunity for 3.5 to 4. and that becomes intense competition for stocks if you believe, as we do, that the three to five year outlook for stocks is mid to single digits anyway. >> i'm sure the fed taperer a tightening and looking at rates moving higher and thinking back to the summer when we saw a similar phenomenon playing out.
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it took some wind out of the housing market. is this a self-correcting mechanism where rates get too high to allow the fed to pursue that as they would like? >> what is interesting about this summer and we are about to find out again how badly the fed seems to misread the dynamics of the financial markets as opposed to the economy. there are all sorts of carry trades and leverage bets in place within the financial markets themselves that i think surprised the fed in how financial markets reacted to the hint of tapering. we have had more time for the asset markets to prepare and traders to unwind positions. we'll see. my guess is that we'll see more surprises from the dynamics of financial markets, not the economy as the fed embarks on tapering. >> what i think bernanke thinks is that they have been able to convince people that because
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they start tapering it doesn't mean they move rates. that is the message they keep going on about. that will be why they taper. i guess what a lot of people are concerned is that you could be tapering when the economy doesn't look strong enough for it in the mind's eye of people who are basically risk on risk off. >> i agree with you there. and again i think what is so interesting is that the comments from bernanke a few days ago and rates are lifting higher anyway. they are trying very hard to convince the market that tapering is not tightening. it didn't work in the summer and i am not sure it is going to work this time, either. >> as we wonder what measures they will use to offset any anxiety about a taper, moving the thresholds, interest on
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reserves, all of these possibilities, does any change in those undermine their credibility? if they move the threshold do we believe the fed will do what they say from here on out? >> i think the credibility is cracking a little bit. they surprised the market badly in september and then tried to convince everyone after the fact that they never implied they were going to taper. that is not the way the market reacted. and the bottom line is the fed is being asked to do more than it is capable of doing. employment is driven by so many factors outside the fed's control. and for them to speak with us in speeches and in minutes and in conversations as if they are going to take unemployment to 6.5 and change their behavior is an unrealistic expectation we have for what monetary policy is capable of doing. the more we do that the less
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credibility they have in the minds of the market. i think it is dangerous. >> certainly, a lot of senators would agree with you. thanks for your time. let's turn to shares of target after third quarter earnings. is it a bad sign of what is to come for the holiday season? a retail analyst. also joins us, managing director and senior retail analyst. welcome to the program. >> thanks. >> fay, let me kick off with you. overriding these result is the expanse target is making into canada. 124 stores by the end of the year. that distorts the figures we have. if you strip that out how do you describe the underlying state of the company. >> the underlying state of target's u.s. business i would
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describe as sluggish. we have seen it from other large retailers notably wal-mart. business could be better. it's not terrible but store sales at .9% is better than negative but below guidance. >> if you look at the operating margins it is down 11%. is this the fact that they are having to discount in response to the scorch and burn policy at j.c. penney? >> i think it is j.c. penney and wal-mart. we have been shouting from roof tops that this year is going to be very different from a promotional standpoint. wal-mart stepped it up more than probably 30 years. these are things that we have never really seen before. and just operationally i think everybody in retail is being
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forced in some way shape or form to react to that. >> is this a climate that is simply turning in wal-mart's favor after being in target's favor over the past couple of years? we are starting to see share performance diverge again. wal-mart said it wants to win christmas. if you look at the amazons of the world they are doing it in a consumer friendly way. >> you have seen amazon come up a lot. it seems everybody has wal-mart at front and center because of what they are doing. gas price is down. it is great for wal-mart and target and everybody. there are still a lot of liquidity issues. we are dealing with the payroll tax. first holiday with the payroll tax. there are challenges for every positive. >> just talk to us about
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inventory at target up 9. relative to history, where are we going into the holidays with as much stuff as we have on the racks right now? >> clearly some retailers are very overinventoried. target has the conference call at 10:30. hopefully they will dissect the inventory a little bit. given the plummeting gross margins in canada 15% down from 30% last quarter. they have a lot of excess inventory. canada is probably a big contributor to target's inventory numbers. there is plenty of inventory out there. some retailers, macy's for instance managing it a lot better than others. >> for the second you want to mention dollar tree having a bad day because momentum is slowing down. dollar general has been big winners in stock markets.
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i know neither of the stocks are ones that you guys cover. let me end the conversation by bottom lining it with you, david. how do we make money in the sectorer? >> i think more defense than offense heading into the holidays. you can hide into wal-mart. they seem to be controlling the promotional environment. maybe that is a place to hide. or to a higher end. it is a challenge right now. >> fay? >> going into holiday i would stick to stocks of companies that are selling because people really want to buy. michael kors, nike. these companies are making things that people are dying to have, waiting in line to have. also, what these companies have in common is that they make products that make a statement, that a blingy, studded michael kors hand bags.
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dow is up 72. senate banking has approved janet yellen as next fed chairman. >> as we expected the senate banking committee has voted to send janet yellen's nomination to the full senate. the vote was 14-8. all 12 democrats plus two republicans joining for the simple majority there. the timing for the full senate vote uncertain. the earliest could be the weak of december 9. it will be important going forward to see if there is, in fact, a delay. on to the full senate. janet yellen now queued up to be potentially the first woman to head the federal reserve. >> thank you very much. when we come back this massive boeing cargo plane stuck at the wrong airport and may have some trouble actually taking off again. we'll get you details on what
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happened. later on it sold out in certain places. some people already in line to get hands on it. it is the x box one. we'll talk to the man in charge of that device, microsoft's senior vice president a little later on.
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dramatically reduce our nation's debt... grow the economy by 5.4% ... and take bold steps to secure our borders. on this, both parties say they agree: democrats... we are very very strongly in favor of moving immigration reform... and republicans... i wouldn't underestimate the house's ability to pass the immigration bill... and yet, we wait... americans are tired of empty rhetoric. it is time for every leader to come through on their promise... and fix our broken immigration system tell congress: the time is now. fix america's broken immigration system. welcome back to "squawk on the street." shares are taking a hit. posted earnings and sales that beat estimates on the heels of
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strong sales of the grand theft auto 5 video game. investors have been looking for a more robust holiday shopping season outlook giving new consol releases. still down 9% game stop shares back over to you. >> thank you very much this morning. >> crazy story. boeing jumbo jet landed at the wrong airport. >> we are talking about the dream lifter which is a modified 747. there are four of them in the fleet. they fry from different places where parts of the dream liner are built. this is the picture of the dream lifter at the wrong airport. you might be saying how did this happen? they were shooting for the mcconnell air force base which is right next to spirit air
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systems which is where part of the dream liner is built. listen to what happened when dealing with the control tower last night. >>. >> well we think we have a pretty good pulse. let me ask you this, how many airports directly to the south of 1-9. >> they are talking about a local highway. i used to live there and i can tell you it is about nine miles away. the dream lifter is operated by atlas air cargo, not by boeing. engineers had to study whether or not there was enough run way length. they believe there is enough for this plane to take off and go to the right airport later today. >> they have assured they have run all of the engineering calculations and performance and the aircraft is very safe for a
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normal departure at its current weight and conditions here. >> so, again, the dream lifter is scheduled to take off at 1:00 eastern today and will go to mcconnell air force base not far away and then go to spirit air systems and get the piece of the dream liner and go to its final destination. as strange as it sounds when i talk to people about this today they say this happens more than you think in aviation. don't be surprised when you hear about this. it is an embarrassing situation. i can tell you it is a tiny private airport nowhere close to the size of mcconnell air force base. >> it's a math problem you want to engineers to double check, check your work. >> and a takeoff you don't want to be part of. >> thank you very much. up next one of the largest news and entertainment sites on the web and has more traffic
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than the "new york times" site. buzz feed is transforming how great content and advertisers target customers. the site's founder will join us after the break. i got this. [thinking] is it that time? the son picks up the check? [thinking] i'm still working. he's retired. i hope he's saving. i hope he saved enough. who matters most to you says the most about you. at massmutual we're owned by our policyowners, and they matter most to us. whether you're just starting your 401(k) or you are ready for retirement, we'll help you get there. maestro of project management. baron of the build-out.
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with more than 85 million monthly visitors buzz feed is surpassing even the "new york times" transforming the way we consume and share media. jul julia borston joins us. >> you have this massive traffic. where are your 85 monthly visitors going? to your brand and content or regular articles? >> the majority of our traffic is going to the site like the majority of the traffic to the "new york times" and other sites. about 75% comes from social. about half is to mobile. so we are seeing big shifts to
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social and mobile that are really driving a lot of our growth. >> how do you make money from the majority of your articles which are not branded content? >> we have promoted content on all of our articles and on our front page so brands use us as a way to distribute their brand and content on the social web. instead of just a banner ad they have a full article and promote it on buzz feed. >> you have been growing very fast. how sustainable is the growth? how do you make sure it is not just a fad? >> you have to continually try new formats. we are obsessive with new formats. we do quizzes and videos. a whole range of content. our focus is making content people think is worth passing on to friends and sharing.
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>> you want to jump in here? >> i am interested to what you say to big media companies. everyone is trying to work out the social media. if you were one of the big tv networks in this country what would you be doing in order to plan a structure for the future? >> i don't really understand the businesses of the traditional media companies that well. i think there does seem to be a huge opportunity to embrace the social web and embrace mobile. we are seeing a huge shift of time towards mobile and social. i think we are seeing that particularly with younger consumers. i don't think it is something they can ignore. i know they have profitable existing legacy businesses that they want to protect so i think there is a balancing act for them. >> you talk about the importance of social. facebook versus twitter, which works better for advertisers and
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sharing content. >> facebook is much bigger than twitter. it is a bigger source oof traffic to news sites, as well, even though the majority of people who use twitter use it. you see a lot of celebrities on twitter and a lot of news makers and elites on twitter. the mass audience is on facebook. >> you think despite the buzz it will be a successful business? >> i think what we are seeing now is facebook is really promoting the content to publishers and news content more aggressively so we are seeing a lot more traffic to buzz feed and other sites getting more and more facebook traffic. >> a quick final question about your international expansion. this about native content or about cat videos? >> animals are pretty universal. humor varies by country.
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content about people's identities has to be made differently in different countries. most traffic is in north america. we have real revenue in the u.k. we launched in latin america and brazil and next year we will see a lot of growth in those markets. >> thank you so much for joining us. really appreciate it. guys, back to you. when we come back microsoft making a big play for your living room. the x box one aims to be your gaming consol, cable box and radio. the man in charge of the x box will join us live with all of the inside info and hopefully the consol itself. y. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time.
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welcome back to "squawk on the street." the department of energy just released its weekly natural gas storage inventory report. we saw a draw down of 45 billion cubic feet. let me put it in context for you. we saw an injection of 20 billion cuban feet last year. this is not in line with seasonal expectations. prices were higher ahead of the report and were moving higher as we got new information. tim evans from citi is saying he
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is expecting the forecast for colder temperatures to keep the supply declining continuing. >> thank you so much. let's get a quick market flash here. >> how about williams sonoma cooking up gains after announcing profits jumped 16% in the third quarter. the kitchen ware and home goods retailer say customers spent more. investors are putting a lot of bullishness into the wsm shares. back to you. >> and as a contrast you look at some of the losers on the s&p today, dollar tree, dollar general close to the list a little while ago. increasingly looking like the low end consumer getting squeezed to some degree despite lower gas prices. >> and meaning those who are
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most aggressive in trying to discount are being rewarded by investors right now. interesting, as well, going into thanksgiving week which will be so promotional we are seeing retailers pull out the stops. to what extent will those who refuse to play entirely be rewarded? the dillards of the world that don't open on thanksgiving, home depot, costco. >> there are six less days between thanksgiving and christmas this year than in a normal year. >> is it worth cracking on thanksgiving day just because there are six fewer days this year? >> you said it was so competitive that they were cutting -- >> it is not exactly apples to apples. philly fed has been higher only once. going into the holiday season with a lot of goods on the shelves. >> compare that to the flash, in
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other words, the early estimate of the u.s. manufacturing which was surprised to the upside. there is some momentum there. the inventory levels won't be a problem unless activity falls off sharply. >> in a moment we are going to talk to someone from microsoft. game stop is one of the worse on the s&p today. it is warning again about sales heading into christmas. find out what attorneys on both sides are saying. we will have a live report from the courthouse after this break. twins. i didn't see them coming. i have obligations. cute obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock.
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where applied, increased red blood cell count, headache, diarrhea, vomiting and increase in psa. ask your doctor about axiron. gamers everywhere are rejoicing for release of x box one on sale tonight. joining us this morning is
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microsoft's senior vice president for interactive entertainment. >> thank you very much. >> you brought it on set here. >> yes i did. >> you want to walk us through what we are looking at? >> sure. this is the brand new x box one that goes on sale tonight at midnight. it is basically the most powerful box we have delivered to provide an all in one entertainment system. the box on top can read you and sign you into your personalized experience. >> you want this to be the center of essentially all content that comes into your house whether on amazon prime or netfl netflix. >> it is the best gaming device we have shipped and it is an all in one gaming device. it lets you get access all in one box. >> is it ready?
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a lot of the reviews that i have seen question is this playing nice with all of the things in my entertainment cabinet the way i want it to be? you guys have to make changes based on early feedback? >> x box one is the most tested developed product we have done ever in the history of x box. done thousands of hours of testing. >> even as this is so important to microsoft and winning the living room. there are those who say this is a money losing business to the range of $2 billion a year. is the business profitable? >> we have been profitable with x box for a number of years. the opportunity now as you go, a billion people play games. the opportunity just to grow in the gaming sector is huge. gametic is the fastest growing
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entertainment sector at all whether talking about movies or tv. >> opportunity, but how is it doing right now? >> we are doing great. we have been the number one console world wide and will continue to grow. >> one of the ways in which people pick up the x box one is from game stop. unfortunately, they have lowered their forecast going into the holiday period. that is why the stock is being pommelled. does that worry you that one of your major outlets in the u.s. is saying we are not going to sell as much stuff? >> i can tell you one thing, this will be the biggest release of an x box we have done. we preordered more than two x. >> you have the inventory. will it sell? >> so far if you look at preorder demand it has been
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bigger than anything we have seen before. if you look at what amazon has said, absent to kindle ps 4s and x box 1s hottest device sold. >> reviews good. x box rocks most of the time. they say it is a new generation of console when it works. those are their words. how many bugs do you expect it to have? >> it is the most tested device we have done. we have had many thousands of users. i think you will have a fantastic experience with it. you can talk to your tv. >> i don't say this to be critical but every time we have a major console on there are always bugs. right now they are more complicated. this isn't just playing games or just showing movies. how prepared are you customer service-wise on social media,
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across the board to answer issues people have so they don't return these things? >> it is a great question. first part was the hard part doing the work to get prepared. in addition we have a number of vehicles we provide. you can call directly. we have a ton of extra people ready to go. we have places on site. we have a twitter and facebook page. we provide help in a variety of forms. we know the demand is going to be there and the interest and passion so we are fully prepared. >> john raises an interesting point. this is the kind of multimedia experience that so many different whether on the hardware or software side the convergence could center around this device for the future. are you marketing it broadly enough? >> great question. in the beginning gamers are the ones who end up buying it.
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over time it will turn out to be a broader entertainment device. >> before you go, what's the gossip within microsoft about a new ceo and the possibility that your division could be split out? you might be ceo of the new company? >> i think you heard steve talk about it recently in the shareholder meeting. x box is central to what we do in the company. this is an example of that. >> how do you feel about the prospects of a breakup? >> i am focused on shipping x box one. i think we are going to have a great holiday. >> your best response to a consumer who is like it looks great, at $500 going into the christmas period with my wallet tighter than usual, how do you justify? >> i think it is cheaper than
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the third ipad or tablet you buy in the house. think about like six years ago when smart phones came out and said this changed the world. tablets have done that for computing. i hope this device does that for the living room. >> you have a long night ahead of you. get rest between tonight and midnight. >> make sure you get one. coming up next more companies returning an increasing amount of cash to shareholders by dividends and buybacks. the question is whether hefty dividend translates to heavy returns. we'll try to get the answer when "squawk on the street" comes back. [ bagpipes and drums playing over ]
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it has been a big year for dividends. companies are now paying 12% more than they did this time last year. does that translate into a rally on the stocks? >> dividend paying stocks have been all of the rage. with the s&p 500 still hovering near record highs we wanted to look at the big dividend payers and how they perform.
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only 38 stocks have dividends of 4% or more and perhaps no surprise the vast majority of those stocks are in the utilities sector. utilities make up 16 of the 38 names. they aren't the best dividend payers. that goes to the telecoms. windstream holdings at 12%, frontier communications with 8% and century link with 7%. on average those stocks have gone up in value but only by about 6% on average so far. s&p around the 26% mark with markets making the new highs. it is becoming harder and harder to find stocks with the hefty payments. the yields go down. you have to pay more for a share of stock to get the same cash payment. those hefty dividend payers were all the rage where investors were hungry for anything that
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yielded more than ten year treasury notes at 2%. now interest rates are on the rise and more pundits believe in extended rally is possible. the allure of those dividend payers has faded. after all some say why buy an electric company like pg&e. the reason why multiples but for at least the dividend payers they are not exactly the big yielding stocks they were in the past and they certainly aren't providing the same kinds of price appreciation. >> what a ride they have had all year long. getting opening statements in the highly anticipated insider trading trial today. kate kelly is live with the latest on that. >> reporter: i am out here where the trial is now underway. the evidence phase just began.
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this morning following opening statements. a little earlier than expected. as part of the evidence phase of the trial the prosecution called cfo and me seengsly what's happened so far is a lot of instructions toless jury, sort of about how a hedge fund works, what a guy like michael steinberg, the trader who ran a portfolio there, did. and essentially, he's accused of using insider information to short a couple of tech names back in 2008 and '09, specifically dell and invidia, and getting ill-gotten gains, profits of $600 million or so. they walked through the money he made during the years in total, what his bonuses were. for 2007, for example, profits of $27 million and a bonus just of $5 million. a little bit less than the two years that followed. speaking of less, the cross-examination from
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steinberg's own attorney of dan berkowitz sought to me to portray steinberg as a bit of a cog in a wheel at a very large company, limited in the amount of capital he could trade, because remember, even when that's allegedly when he engaged in the insider trading, simon, that's at the beginning of the financial crisis. at the time, by the end of the year, he only had $150 million to put to work. a lot of money to you and me, but not a lot by hedge fund standards. >> kate, how long do we think the trial is going to last? >> reporter: you know, they estimate the trial, because i believe they're not in court on fridays, and then, of course, we have the thanksgiving holiday, will be four to five weeks in total. this is obviously week one. but a very interesting start, and, of course, you want to see the tone that people are setting, and we're getting a pretty good flavor of that so far. michael steinberg has been there the whole time, and also, i noticed, s.a.c.'s lawyer, marty
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clots is in the back today. >> okay, kate, we'll leave you to get back inside the courtroom for the moment. thank you very much. in just a few days, new jersey will become the third state to allow online gaming for real money. is there profit for you to make in this space? we'll talk -- we'll talk to the ceo of caesar's acquisition when he joins us live at post 9 here after the break. parties in washington get it: washington is lagging behind the country on this... ...this issue has been around far too long... and yet, we wait. reforming our immigration system would dramatically reduce our nation's debt... grow the economy by 5.4% ... and take bold steps to secure our borders. on this, both parties say they agree: democrats... we are very very strongly in favor of moving immigration reform... and republicans... we do want to make some progress
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welcome back. new jersey is rolling the days on internet gambling today, launching a five-day trial, that if all goes well, will officially sanction gambling on tuesday for atlantic city casinos that contracted with the online gambling services. one of the casinos is caesars, but if gambling online isn't for you, a caesars spinoff company will now allow investors to bet on its online gambling business. and joining us exclusively now on cnbc is mitch garber, president and ceo of caesars acquisition company, and the ceo of caesars interactive entertainment. welcome. >> thank you, kelly. >> first of all, how important is this five-day trial period to the future of online gambling? >> i think it's quite important. although we've had a couple of months of experience with real money online poker in nevada, it's going extremely well. there are two companies that are currently active and live there doing very, very well.
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so we've proven the concept in the united states. but i think that each state will have its own conditions and its own tests and i think that new jersey's next five days will be quite important, but we're very confident. >> so what does it mean for your company, ultimately? if this goes ahead and new jersey casinos become the first way that people can begin to gamble online? >> basically, we look at it as the second domino wave in gaming. it started in new jersey, nevada, with land-based, and then online, nevada first, new jersey second, and then other states coming. >> what happens if they don't? if adleson is successful. >> we're strong proponents. we know the activity can be regulated. we know it can be taxed. we know it can be monitored. we can take care of the responsible gaming and minor gaming issues and feel strongly we'll prevail and this will be an activity more widespread and not less widespread. >> there will be people who
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watch you who get checks, because they're native american tribes, and they've had the right to have their own casinos for 25 years, whatever it,since the act went through. 500 casinos, $30 billion, $40 billion business. you are going to cut away at that business clearly if you are successful. what sort of backlash are you anticipating, and how will you head it off? >> two answers. first of all, it's been proven for a long time in the u.k. and australia that online gaming does not cannibalize offline gaming. offline gaming has grown when online poker was growing in the u.k., europe and abroad. >> u.k. and australia don't have a vegas, or the very select built-up sites. it's a very different -- they're very small countries. >> they don't have a vegas, but at the same time, they have land-based gaming. even in the united states, while they were playing in offshore gaming sites, poker grew exponentially in the land-based casino rooms in las vegas. the second thing i would say to you is california is the next most likely state to legalize
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online poker, and the native tribes in california are driving that process and must be part of the process. so we will, and our partners with native tribes, in the state of california. >> of the states that are pending, is california like the golden goose? is that the one everyone wants? >> it's the golden goose because of the population. it's the golden goose because it's the most -- it's further ahead than anybody else. for many reason, it is, in fact, the golden goose. >> we hear so much about the land-based growth in, say, macau, where the market is -- it's full-blown. it's a land rush, huge development. how does the growth there compare to what the growth could be like in this country online? >> look, the growth could have been massive online here if we got a federal bill. it's going to be a little slower going state by state, but this is a big business. it's a $6 billion, $9 billion a year business, and that's poker only. we're very bullish on what this means. if may take time, and it will take time. we're bullish on the prospects of it. >> in the u.k., the argument always used to come up, and mainly from the churches, that this is actually a social fad. this is something that people get addicted to.
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what do you say to that argument? >> there's a great number of studies that show there's no greater likelihood to addiction of gambling online than offline, and companies like ours -- >> that doesn't make it okay, does it, they're both addictive. >> i think it does. we're conscious of responsible gaming. we're very, very conscious of addiction to gaming. we don't want addicted gamblers. we want people to entertain themselves, gamble within their means, bet with their heads, not over it. we have the same policies and the same -- we have the same policies in place online as we do in the land-based casinos. >> isn't there a push for the online gambling, if it catches on across the u.s., and frankly worldwide, will undermine your ability to profit off of it, because people will have so many different options, so many different ways to play. how do you make sure you're benefitting from this trend? >> look, we feel that the combination of our land-based assets -- hotel rooms, shows, restaurants, online brands, world series of poker, caesars -- if we cross-market them, and use the databases the way we know how to use them,
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we'll benefit as much or more than any of the competitors will. >> is the most popular game texas online? >> by far. >> by far? by a factor of -- >> by a factor of a lot. >> all right. mitch garber, thank you so much. we'll be watching. >> thank you. let's see. how much time here before the top of the hour? not much. by the way, dow at session highs, biggest gain in about two weeks. >> philly fed disappoints. >> despite the fact -- sorry, despite the fact that the bond market is selling off. >> that's so interesting. after the philly fed dispiappoi. >> yeah, showing some resolve. we'll see you in a few minutes to talk about europe. if you're just joining us, here's what you missed earlier on. >> announcer: welcome to "squawk on the street." here's what's happened so far. >> i have stocks that will double in the next five years that's a 13% or 14% compounded return, but mark-to-market, they'll have a hiccup at some point in time, which is terrific. >> the long-term investor's really not back yet. >> they're not back yet. >> they're not back yet.
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we are seeing the people who are active to stay very active. but the longer-term investor -- >> no up tick at all yet? >> it's very little. >> treasury anticipates exiting the controversial general motors investment. it will do so by the end of 2013. >> i mean, look at walmart. look at walmart bounced. if i had walmart, things are really bad, how high would it have bounced? people are very forgiving. they will forgive them three days from now. if you ask me of the two, i'll take target. remember at the head of september? the shorts? bernanke is a dignified man, he doesn't say i'll gaffe the shorts. they have to play the game. they have to keep the breaks. it's the best way to keep them from going to three. [ opening bell ] >> as we expected the senate banking committee has voted to send janet yellen's nomination on to the full senate. >> so you think that despite all of the buzz about twitter, facebook will be a more successful business? >> facebook is a bigger
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business. it's a bigger market cap. it's a more mature, more advertising revenue. ♪ and good morning, we're live here at post 9 at the new york stock exchange, and take a look at markets, because this hour we're actually seeing some pretty nice gains. 90 points on the dow. we're up about a third -- sorry, almost 1% on the nasdaq, and about .6% for the s&p 500, this despite disappointing data out of the philadelphia fed. look at shares of green mountain coffee, rallying after earnings and revenue beat estimates in the fourth quarter. the coffee company announced a $1 billion stock buyback program. shares up 18%. we're also keeping an eye on health insurers -- aetna, cigna, united health -- all rallying after upgrades. woe is retail. a lot of major retailers reported earnings, and a lot of the results came in below
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estimates. is retail in trouble ahead of the holiday season? more on that. are we due for a major pullback? stocks are up today, but more and more people on wall street are bracing for some kind of correction. we'll tell you if and when that pullback might come. and who cares about a couple of battery fires? certainly not tesla customers. the tesla model s took the top spot in the "consumer reports" satisfaction survey. "consumer reports" will be here to tell us why. and is this the end of the toy story? a new report says if retailer toys "r" us has a bad holiday season, the company could go belly-up in the near future. we'll explain that in a few minutes. speaking of retail this morning. take a look at target. the shares off better than 4% after third-quarter earnings missed estimates. bob pisani joins us now from the floor with more on this one. hey, bob. >> i'll make it simple for to you understand retail. the high end is doing very well. the low and the midtier is very cautious and very promotional. now, i want to start out with the high end, guys.
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williams-sonoma, the high end, they did well overall. they raised the full-year revenue estimate, still below consensus. but all of the high-end guys have done well. we've had nordstrom report, fossil, kors reported, tumi, they all did great. the one exception on the high end, coach, they're losing out to michael kors. but that's the one exception. tiffany's we'll get shortly. they haven't reported yet. elsewhere, you know, you have to look at the low end of the -- low, middle end of the market. it's simple. not enough job growth and there's not enough income growth, and then companies with specific problems. take a look at sears. i don't want to throw a lot of numbers at you. i'll make it simple. same-store sales down 3.1%. this is kmart and sears together. i checked this, it's 14-straight quarterly sales declines is what i saw. 14 straight quarterly sales declines! good heavens! now, we know they're not investing much in the stores, but that's just a move to the downside. now, we saw the move up on the last quarterly report here and the company looks like it will survive, and everything is going to hold on. still, that's a pretty
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breathtaking in terms of the declines. what happened to target? everybody wants to ask me this morning, the big question, what happened to target? look, here's the story. same-store sales were down. traffic is down. look, they have the same problems the midtier, but another problem. no buzz around them anymore. it needs a refresh. remember mcdonald's, remember home depot? they all dropped several years ago when they got stale, got new management, and it looks like target needs a refresh. look, all year, gone practically nowhere, barely up when a lot of the competitors are up nicely and the overall market is up nicely. street has spoken about that one. as for abercrombie, here's a good example and be aspirational, and then not aspirational. people didn't like the styles in the stores, and they gave guidance for the current quarter low double-digit declines, and also, disappointing. very, very mixed picture out there in retail land. back to you. >> a tough business. thanks a lot, bob. bob pisani. speaking of retail, are you
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one of the thousands of people that get a coupon to the gap just about every day? well, all of the coupons are making analysts wonder if consumers will ever pay full price at the gap again. courtney reagan is back at hq with more on that. >> consumer psychology is a powerful thing. remember when jcpenney cut out the coupons, just aiming to discounts built in, and now, they said, coupons are like a lot drugs. if that's the case, gap is flooding consumers' e-mail inboxes with sale notifications every day. promotions far from a novel idea, and during the holiday season, it's as much of a tradition as stockings on the mantel. but many of the analysts that cover gap are calling out the depth and breadth, 40% off nearly every day. gap operates in a competitive space. deep discounts and promotions attract attention from shoppers.
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but naturally, the further the prices slash, the smaller the profit. investors aren't going to be happy for long if the profit margins get tighter and tighter. when the gap reports earnings after the bell, wall street will know how much margins suffered from the seemingly incessant sales. they note gap's expense discipline has provided a cushion. margins are lower because of the level of promotions. discounts a necessary evil, a basic tenet of retail. many think the financial crisis actually permanently changed consumer habits and what we expect from free shipping to extreme discounting, and that gets tricky for retailers like the gap. i don't buy from the gap unless it's 40% off. on the offchance i catch it when it's a day it's not, i'll wait tomorrow, because it will be then. >> even as you're speaking, court, we're hearing from viewers on twitter saying it's not just gap. it's banana, it's old navy, the entire company -- >> right, i'm sorry if, that wasn't clear, i meant that. between the old navy, the banana
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republic and the gap brands, especially. >> i think viewers know what you mean, but they're backing you up. thank you so much, court. >> thanks. markets are moving higher this morning, but many people on wall street are bracing for a pullback. you can count goldman sachs among them. the firm now expects some kind of correction in the markets next year. let's bring in brian bellski, and john with rdq economics. good morning. >> good morning. >> brian, first to you, look, at this point, it makes sense to call for a correction. we've not had one in over two years. how unusual is that? >> well, it's very unusual, especially new look at how the market's rallied since the march '09 lows, and that's why we wrote the piece last week. listen, we've been doing this for 24 years. typically, historically, when everyone is looking for a correction, one rarely happens. we think most investors now are quite surprised that we're seeing strength in november. we stand still, and still very, very comfortable with our 1,800 price target for the s&p 500
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this year. we think investors are still very poised with respect to equities. we are going to get a pause at some point. stocks are not linear for long. i guess when we stop talking about corrections on tv and we stop worrying about corrections, that's probably when it's going to happen, after the market spikes a lot higher from here. >> well, that'll never be the case, and especially as the market moves higher, john -- [ laughter ] -- it seems like all it does is either have more people saying that they're calling for a correction or more people saying they're not happy with how strong the rally has been. is there something to this idea that this market, in fact, is not to be trusted? >> well, i don't know. if you look at the profitability of u.s. companies, it's very high, and you look at the discount rates given quantitative easing, the discount rates are very low. so though we've had a tremendous run, it's hard to say that the market's expensive by traditional metrics. so the question is, i suppose, when the fed starts to give us less from the punchbowl, when
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they start to taper on qe and discount rates go up, will that be the catalyst? and i agree with brian, things we look for rarely happen. but i would look for any correction if it comes, to come about on a partial renormalization of long-term interest rates. >> you know, john, i want to go back to something, as well, an apology to longsuffering viewers on this point. but when we're talking about what the fed does here, and whether, if they stop qe or they taper the program, that amounts to a tightening of financial conditions. what is your view on this? in other words, is this something where, while the fed may not raise rates for several years, it still means that the stance of monetary policy is not so accommodative? >> well, technically if you're buying at the slower rate, which is what tapering means. we're not talking about ending purchases cold-turkey. you're easing to a slower rate. it much depends on whether the fed communicates the message, that buying less isn't a signal that we're about to start hiking
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rates in the near term. so it is what it is in the market. and there was some tightening in financial conditions in the bond market, but the stock market's had easing in financial conditions all year. so it's a tale of two markets really. >> yeah, it's kind of like the fight we have when there's a tax cut, quote/unquote, even though it's a higher tax at a decelerating rate of increase. brian, you know, we have managers come on and say, oh, we went through the taper scare in the summer. we've somehow been inoculated with this virus, and we'll survive it better the next time. do you believe that? >> no, i don't believe that. we have now reared an entire generation of investors, carl, that they believe that stocks go up due to monetary policy. and we're publishing our year-ahead piece on december 2nd. and i'll just tell you the first word of our market outlook is "unfortunately." "unfortunately" things have to end at some point. we are going to have a bit of a pullback next year, we think. we think tapering will be the
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scapegoat. we are still involved in a very reactionary market. that does not change our 18 to 20-year bull market thesis, carl. it just says, stock s need a respite, and from a fundamental perspective, that's very good, because you'll see more earnings growth and sales growth, which we think will fuel the next leg of the bull market. >> all right. brian and john, thanks for your views on that one this morning. we'll keep an eye on market, up 87 now on the dow. the next guest owns an $8 billion hedge fund that is one of the biggest media and telecom investors in the business. you'll want to hear what he has to say, bus today, he's talking about a potential bubble in internet stocks. philippe laffont will be here to explain. tdd#: 1-800-345-2550 trading inspires your life.
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>> when you look at the stock performance and you see netflix up 200% and yelp up 200%, it reminds you of 1999, and i started in 1999. so the bubble is near and dear to me. but when you look at the valuations -- the large internet companies, 20 times earnings for 20% growth, and i think the rule of thumb, 20-for-20 is a good metric to invest. so on that say, i would say, no. some of the smaller companies, like netflix, linkedin, some of the new ones, even, like, facebook, the earnings are very high, but the business models are changing. so i'm reasonably optimistic on those two. but it's definitely -- >> the earnings multiples are fairly high. >> yes, exactly. >> not to mention twitter, which is not yet public -- which is not yet profitable, recently gone public. >> yes. so in those cases, you have to figure out, what could the earnings and the revenues be five to seven years out? as you said, today, they're not even profitable. >> a key thing i think a point you made in your presentation as well, though, we talk about
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internet stocks. there aren't that many megacap internet companies, despite what is an enormous market, so to speak. >> yes, that's a great point. when you look at the large financial companies, there's 400 financial companies that have a market cap of greater than $5 billion, and 40 that have market greater than 50. there's only seven large internet companies -- there'll be an eighth one when ali baba when it goes public -- but there are very few. that's why we like the sector so much, because there's few companies that's sort of a "winner take all." if you can be one of the eight companies, you have incredible opportunity -- >> where do you draw the line, though, on what's an internet company, given every business is involved in the internet? >> yes. i would say -- and that's also a good point -- i would say it's the companies that predominantly, most of their business is transacted through computers, so that they don't have a lot of inventories, don't have a lot of factories, they don't have a lot of people. most of the businesses, i place an order on the website, and then some goods or services --
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>> ebay. >> amazon, ebay, google, linkedin, twitter, facebook. and then there's some incredible foreign companies, 10 cent, ali baba, and bidu in china. >> ali baba going to go public in the first half of next year. we'll wait and see what that valuation is. >> yes. >> you chose bidu as one of your picks. why? >> you pay 25 times earnings for it, and the company grew 40%. and one of the things we talked to the presentation today is the difference between growing 30% and 40% after ten years, that difference between 30 and 40 is three-quarters of the future revenue, so it makes a difference if you can grow at 40% versus 30, and by this case, you pay a small premium over google. but for double the growth rate. if you let the compounding work, i think baidu could triple over the next five to seven years, whereas i thought maybe google
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was a double. >> although google was one of your picks. someone will say, google, we're paying this guy 2-and-20 to tell us to buy google? >> yeah, in a debate we're not going to have here today, we might argue around the 2-and-20. >> i don't know, maybe you're higher. >> i'm 1-and-20, so i feel i'm -- >> look at that. you're 1999 rates. you didn't move them um. but why google? >> google, the basic mission of google is we want to organize the world's information. and if you think about it, that mission becomes more and more relevant year after year. but if i was investing in xerox or hp, wow, those are printers and photocopiers, it feels to me in five to ten years they'll be less useful, whereas i'm not going to be looking to google to find more information? yes. we'll be investing in the companies that are more relevant, that are getting stronger. you can also say, well, this is a bad company that's becoming less bad, but i find in growth investing, you want to go after sort of the big future winners,
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and google seems to me number one in that position. >> we're running out of time. let's come to the last pick, as well, which was netflix. of course, you've already pointed out it's up 260% this year. certainly growing very quickly in terms of its subscriber base, both here and abroad. nonetheless, people wonder about the valuation of this company. and whether it can withstand what might eventually be some sort of challenges from the cable companies who are sort of seeking to almost partner with. >> yes. netflix is the top of the mind of a lot of people who are in the traditional media -- >> including john, somebody we both admire. >> -- yes, absolutely. and what's fascinating about netflix, today, it has 30 million subs, but if one day it had 100 million subs, i mean, hell, hbo has 100 million, and had their margins, you could say it trades 10 time earnings, so a much lower multiple. i know it's gone back to 300, and i can't predict where the next 100 will be, up or down,
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but five to seven years out, to me, of all of the internet companies, it's got the most fascinating business plan and the ability to extend in a lot of new areas. >> you believe the massive could be massive. >> and reid is a visionary of the whole business. >> reed hastings. well, thank you for joining us. >> thanks very much. >> philippe laffont. back to you guys at the nyse. >> fascinating stuff, david. thank you, both. stay tuned. there are great guests coming up next hour, greenlight capital founder david einhorn will be here. and starwood capital chairman barry sternlicht, starting at noon on "the half." when we come back, the city of baltimore's infrastructure has sprung a leak. actually, a thousand leaks. they face a $3 billion funding gap for its water system, and that number is only going to increase going forward. we'll tell you how much it may cost to fix when "squawk on the street" comes back. ♪ beg your pardon
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this week on cnbc, we're looking closer at american cities, many of which are facing big-time problems. baltimore is one of the cities, and it faces a funding massive gap when it comes to infrastructure. scott cohn is live. he is at a wastewater treatment plant in baltimore. good morning, scott. >> reporter: good morning, carl. i get all of the great assignments. be glad you, and you folks at home, don't have the smellavision. this is the wastewater treatment plant that serves about 500,000 people in the baltimore area. it dates back to the great depression, and that tells you what you need to know about the water system here. they have, of course, made a lot of improvements since then, and all of the improvements are very, very expensive. of course, this is just one part
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of the water system. baltimore has about 4,000 miles of water mains. typically, the pipes are around 70 years old, but a lot of them are older, in a city that was founded in 1729. they average about three water main breaks every day. and today, in baltimore city and baltimore county, working on 16 water main breaks. the city has budgeted $3 million over the next several years to fix the problems. but the mayor says that will cover only half of the need. >> we need to have a federal infrastructure bank. when you repair pipes in baltimore, those are jobs that can't be exported to china or india or anywhere else. that's money that recirculates in our community. so to me, this cries out for a partnership. >> reporter: and there's no denying the need. it's not just baltimore. the epa says the price tag to keep clean water flowing to america's taps over the next 20 years, $384 billion.
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and then, another $300 billion to overhaul some 800,000 miles of sewer pipe, and waterwater treatment planting, according to the american civil of american engineer, plants like this, where they have a $1 billion improvement under way to meet epa mandates. coming up later on "power lunch," we'll look at who pays for all of this, why it's so expensive to keep up the infrastructure, and we have a lot more about all of this and how your system stacks up as, our special report. and we want to hear from you on twitter @savingourcities. guys? >> all right. baltimore, the latest in scott's cross hairs. scott, thank you very much. a couple of battery fires won't get tesla down too much. today, the tesla model s is taking the top spot in "consumer reports'" satisfaction survey. we'll get the reason why next. bells are about to sound across europe.
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a few minutes left to go. we'll get you the details and the impact on markets back here when we return. ya know, with new fedex one rate
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[announcer] firmness settings for the head,legs,and back... and with tempur on top,that famous tempur-pedic comfort comes any way you like it! [woman]ask me about the lumbar button. [man]she's got her side...and i've got my side. [announcer] tempur-pedic.the most highly recommended bed in america. [woman]don't touch my side! >> announcer: the european markets are closing now. and as they close, let's bring back simon hobbs. simon, what have we got? >> if you look at the figures, it's relatively flat going into the close in europe. we were down more, but we've cut the losses, partly because of the rally here. the markets are moving much more on the fed, at the moment, than what's happening in europe.
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today, the president of the european bank, draghi, played down that negative interest rates were on the way. saying there was no news. and they clearly put it on the table. the data continues to deteriorate in europe at the moment. i want to show you the composite pmi readings. the figures are above 50, however, moving back down towards 50, from 51.9 last month. so the pace of the acceleration is slowing down. and you will see that france is below 50. france is contracting. is france going back into recession? in france itself today, the french farmers were out protesting in time-honored style by blocking the roads into paris. they are protesting about tax riders, the latest in the protests. the tax taken in france, incidentally, according to s&p, 53% of the gdp, and the sales tax is going up in the new year. but all is not lost. enjoy. it's from europe, yes, enjoy
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it's from europe, the new slogan that europe will be using to sell you the agricultural products and food, and, in fact, if the commission gets its way, they'll be increasing the budget for the enjoy it's from europe campaign to $270 million. i think that should be the slogan for this. enjoy, it's from europe. the european close. >> we're going to get that graphic ready for next time. simon hobbs, thanks a lot. despite the fires and the nhtsa investigation, tesla remains the top choice for consumers, this according to "consumer reports." the report out this morning says the consumer tesla satisfaction ratings came in at 99 out of 100. john linkoff is the managing editor of autos at "consumer reports." john, good morning to you. 600 survey responses, 99 out of 100. how often do you see that? >> well, we see it on the number of vehicles, particularly the green cars or performance cars. those always rise up to the top. you know, we've been doing the survey since 1999, and the
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things that really move people tend to move cars up to the top of satisfaction. so again, your porsche 911s, the corvette, toyota priuss, they have been top performers, and the volt fits into that, not also as performance, but also green. >> you mentioned luxury, high performance, and novelty, too, cars that bring them to the top of the list. you could argue tesla has that in some form or fashion. >> yeah, it has the luxe factor on top of that. it speaks to people's hearts. if you look at it conversely, cars that disappoint, the acura ilx, it's a luxury car that came out, a gussied-up honda civic, and about 50% satisfaction, a really low number for a luxury brand. it has to be something that speaks to people for them to buy it and keep it. >> and we'll see, of course, whether the investigation into fires at tesla starts to change that at all. in the meantime, i'm also curious, jon, if you do this annual satisfaction survey, what were the biggest surprises to
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you this year? >> it's interesting to see vehicles like the volts still have staying power. it's dropped down to third now. it used to be number one. it was about 91% response rate as far as satisfaction. so it's just interesting that a car that kind of got a lot of push and pull in the media, with the government, you know, with government motors, still has a lot of interest among its owners. they really want to get back into it. again, you know, talking about the drop side. we've seen a lot of vehicles that are kind of -- i'm going to say junky suvs, or junky cars that come from manufacturers that haven't put effort into them. the jeep compass, the jeep liberty, vehicles at the bottom. to see a vehicle from acura drop down low in the first year, that was a big surprise. we liked it in testing, but to see with the owners go with it so hard, that was a surprise. >> nothing is as low as the nissan versa sedan. the lowest score for the second year in a row? >> yeah, the nissan versa sedan is one of the cost-cutting things where you see a manufacturer, such as nissan, kind of -- you know, they threw
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something out there, thought they'd go for a price point, a $9,000 car, for example. a big selling point. you know what? you get what you pay for, and people have been saying, just unhappy. plasticy interior, loud. they don't care that it's got a lot of room for a small car. the fuel mileage isn't particularly impressive in the testing. and it's at the bottom of the ratings, and people are telling us, yeah, you are right in the way you tested it, because i bought this, unfortunately, and it's not making me happy. >> interestingly. they should have listened to you the first time. i don't know when the survey timing was, but if you did the survey again on the model s, if you think the fires would have any impact, if they'd be able to do a 99 again? >> yeah, you know, that depends, the questions, one of the ways i look at it, a, we do recon text surveys at times, but secondly, i haven't seen any reports saying people are handing back their deposits on teslas. it's not the same as owners. the fires haven't taken the life out of tesla, maybe for the market, maybe some investors don't like it, as much. and you have, you know, clarence
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ditloe looking into it, but as far as the hype, they still want to buy it. so i think people would still be satisfied. >> all right. something to watch, and good news for elon musk on a day when "fortune" names the businessperson of the year. that's nice things to have in your quiver. jon, thank you for joining us. more than half of tech hires are women, and that's the first time in a decade that that's happened. at least according to the headlines. the publications are citing the bureau of labor statistics saying the tech industry added 39,000 jobs between january and cement. 60% of those were women. our own jon fortt is looking into it. he went behind the numbers and joins us now to say the headlines, jon, may not be entirely accurate. >> they're just wrong, kelly. they're just wrong. >> yikes. >> dice put this out. i traded a couple of e-mails with one of the p.r. people. here's what they did. they took one industry category -- computer designer related services -- and used
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that as a proxy for all tech occupations. you just can't do that, because that's like saying, banks in their employment had a net addition -- mostly women -- and then going and saying, well -- >> all tellers or something? >> they hired mostly women bankers, investment bankers. it's just not true from what we can see in the data thus far. so they come out with these reports, dice has a lot of great information. but a lot of people are taking this data just the wrong way. >> so what is it -- are you able to get a broader sense of what's happening in terms of tech employment in the industry, and any sense of whether there are more women being added to the payroll? >> there are a lot of efforts to add more women to the payroll. this gets complicated because there are so many different slices, so many different areas. look at software programming. that's a very high-wage area, where there are a lot of efforts to add women. mark zuckerberg, bill gates among those doing that. very important efforts there.
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there are also other area, when you're designing systems, working on industrial design, like johnny ivey does, and the computer support roles, many of them are high wage, some are low wage. so you have to look down sometimes the specific categories, even specific geographic areas. >> it does sort of lead you to, for instance, the conversation we had before the twitter ipo, why are there no women on the board of twitter, right, which la costa said he would remedy eventually. is that a problem, a cultural problem longer term? >> i think it is a cultural problem. and mostly, it's because i think as an economy we want to be getting the best out of all of our people. so you don't want untapped resources. we understand this about companies that you want to be using all -- optimizing all of the resources. i think as a country, we want to optimize the human resources, we want the smartest men, our smartest women working on our most important economic problems, and right now, tech is
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a key growth area. >> just to go back to the category which is called, what, again, this one that spurred the report? the category -- in other words, in -- >> computer design related -- >> that's still the case they're hiring the largest portion of women we've seen in some time, that still, you know, improvement. it's still a positive sign, is it not? >> we don't know. because this category is mostly companies that are doing outsourcing. handling kind of the coding -- custom coding needs. it's not companies like microsoft or apple. they could be hiring customer support people, or they could be hiring engineers. we just don't know from the numbers. >> all right. fine. >> thanks, jon. way to upset kelly. >> yeah. let's get to dominic chu back at hq. einhorn is moving micron. >> yeah, i'm not going to try to upset kelly here, but sticking with the technology theme, because micron shares are rallying after greenlight capital's david einhorn revealed his long position in this stock. the shares spiked after einhorn said this at the robin hood investment conference. obviously, where we're sitting today.
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new york, this morning. shares up more than 5% for the semiconductor maker. einhorn will be on "fast money," remember "halftime report," at noon, for an exclusive cnbc interview. we'll talk possibly about micron and everything else happening, carl, at robin hood. >> thanks so much, dom. see you soon. is this the end of the road for toys "r" us? one analyst from moody's has looked at the numbers and says if toys "r" us doesn't have a good holiday season, it could face bankruptcy in the near future. we'll talk about that in just a moment. with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
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♪ welcome back. the upcoming holiday season could be make-or-break for toys "r" us, at least if you listen to signals coming from the credit watchers. moody's analytics knows investors have been dumping obligations owned by toys "r" us, pushing the price of the bonds sharply lower. joining us is jerry templeton, separate from the group that actually rates the bonds, from moody's, joining us at post 9. this one jumped on your radar, did it not, jerry? what's going on here? >> yes. thanks, kelly. investors are currently quite bearish about the credit prospects of toys "r" us. if you look at the senior unsecured debt, for example, comes due in 2018, right now that's currently trading at
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about 80 cents on the dollar, and that's down from par this past summer. so that's a large drop in price, especially considering the fact that these are bonds. you're not really supposed to see that kind of price volatility in that short of time period. >> and whether that happens, what does it mean to you? >> well, at 80 cents on the dollar, that equates roughly 13% yield right now. if you were to map that to the moody's rating scale, it would rate to a single "c," the lowest notch on the rating scale, and also four notches below where moody's rates the senior unsecured debt of toys "r" us right now. >> you're looking at the negative discrepancy, in other words, on these, and historically, the number of instances where a discrepancy has led to, what, a default, a bankruptcy, both, liquidation? >> yes. to put that in perspective, a little bit, in the past, when we've had situations for bonds trading by the mark, as if rated by a single-c, but moody's rated them c-aa1, and four out of five
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cases, the company would go on to default on its debt in the next three years. >> and that would seem, especially in the run-up to the holiday season, to suggest they better deliver? >> yes. now, it's always the past results are not a guarantee of the future performance. but those are the odds you're facing if you're considering investing in toys "r" us bonds, because they're cheap. >> cnbc has reached out to toys "r" us, and here's what they had to say. the company has a successful track record of refinancing and at this time has no outstanding debt. repayments until 2016 providing a large window to grow and develop new strategic initiatives. they have a point, jerry. >> yes. well, the company's absolutely right. there's definitely silver linings here, if you will. one of the major issues that the company is facing right now is competition from big-box stores and online retailers. but that's not something new, that, you know, something the company hasn't faced before. and it's also definitely true that earlier this year, the company was able to refinance more than -- more than
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$1 billion in upcoming debt maturities, so liquidity is not an -- not an immediate concern right now. >> although for a long time, we thought they'd be a public name and the plans never came to fruition. >> that's correct. but that's not necessarily -- it doesn't necessarily affect the probability of the fault of the company. >> right. the instances in the past where you've seen a move like this, do they tend to be concentrated in retail? >> no, not necessarily. they tend to probably more cyclical industries, but it's really spread across the board. >> and speaking of which, just want to ask if there are any other names that have jumped on the radar screen ahead of the holiday season, given how competitive and early discounting we've seen in the headlines? >> right now, i've just looked at toys "r" us. yeah, there's -- you know, there are situations we'll end up writing about, also. >> you're also dealing with an industry where the lion's share of your earnings for the year are in the fourth quarter. so that's why the emphasis on christmas, i guess, on the holiday? >> that's exactly right.
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something like 40% of all revenues and maybe 70% of all earnings, profits, cash flow, generated in the fourth quarter. >> i have a feeling discount shoppers will be heading to the aisles of toys "r" us to see if they might benefit as a result. it will be an important time of year for them. >> yes. >> thank you, jerry. jerry templeman, senior analyst at moody's analytics. a big game for gamers everywhere. xbox one hits store shelves across the country at midnight. a big party in times square. which company is in the best position to win the console wars this holiday season? microsoft or sony? some answers after the break. ♪ ♪
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♪ ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade.
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all right. welcome back. the "halftime" show will be live from new york city and the robin hood investors conference. some of the best investors in the world are here. barry sternlicht will be here to talk about what's the latest and greatest in real estate, and our exclusive interview with david einhorn. stocks are on the move today in part because of david. we'll talk about his latest best play, and all of the big ones -- apple, green mountain, chipotle. that and more at the top of the hour. we'll see you in a bit, guys. >> and now, micron, scott. thank you so much. time is ticking down to microsoft's xbox one launch. earlier, the vp of microsoft joined us and had this to say about the upcoming launch. >> this is going to be the
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biggest release of an xbox by a factor. we've ordered more than 2x. there will be millions and millions of these hopefully in use by the end of the year. >> with competition from sony's playstation 4, who will come out on top in the battle for the best console? tina amini is with a gaming site, and jon fortt joins us, as well. tina, good morning. >> good morning. >> reading over the review, a surprising number of weak spots, which is a theme we're hearing again and again. does that offset all of the good things being said about it, too? >> absolutely not. this is the way things go with hardware launches, and it's been a rough spot with some of the feature, but we'll probably see our way there in the couple of months. >> where exactly are the bugs, so to speak? >> well, which console are we talking about? >> the xbox one. >> for the xbox one, some of the features with the tv capabilities, work -- work very well when they are working, but some features where when you're trying to switch, audio issues
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and maybe kinnect doesn't work properly, and it still has a ways to go. >> tina, it seems to me the xbox one is trying to be a pc for the living room, trying to do a lot of things, control a lot of different peripherals, whereas the ps4 is more of the social gaming appliance, a little bit simpler, maybe a smaller market, longer term, but fewer things that can go wrong. is that a fairway? >> absolutely. that's very accurate. even if you look at the interface for the ps4, it's like facebook for gamers. in terms of the xbox one, when you play around with that, they want to take over your living room, both in terms of the size of the thing as well as what it does. >> that seems kind of dangerous, though. i mean, the last thing microsoft wants is a bunch of returns, people just don't understand how to use it, and they're posting reviews saying, hey, this thing's too complicated, it made my tv turn off when i wanted to turn it on from voice command. what can they do to avoid that kind of problem?
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>> they need to iron out some issues, but once they do, it will be a good media center device for everybody's living room, really. >> and that's what's going to be key, i think, to the success. some of the features, if they're easy for people to use, they might suddenly say, i love this, and i want this in my living room, too, so that will be important for the success, at first. >> yes. absolutely. part of the way i use my xbox 360 is my media center, i watch netflix, listen to my music stream through it, and i think that's what they're shooting for for the xbox one. >> is this one where you have the one, you'll upgrade? >> eventually, when you see the games coming out, i think people will. >> interesting. are you following at all the guidance that's coming out of gamestop today? >> no, we -- yeah, more business end. we're more editorial end. >> because that's another story, jon. one of the biggest losers on the market today. >> i want to ask you about kataku, and over the past few years, we've seen this enormous
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shift in mine-sharing gaming, it used to be about the consoles. is this a big a deal to you as it used to be, versus all of the ipads that are coming out this season, different android tablets and the games ought to be available on those? >> absolutely. that basically is a whole other market of gamers, and we created something called kutaku mobile just to cater to that. and we review android ios and games and try to keep tabs u. >> price point, quick question. is it worth $100 paying more for the xbox? >> you get the camera, so it depends on what you are looking for. playstation doesn't come with its camera. kinnect is $100 extra. >> what games did you try out? they look better? >> they do. it will be very marginal for a lot of people. if you have that kind of keen eye, playing games for a while, you'll notice a difference, especially for something like -- i've been playing battlefield 4, and you can play 60 play others on multiplayer, as opposed to
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the downsized player rounds -- >> wow. you can hear the gamers salivating. you going to the party tonight in times square -- >> i can't hang anymore. >> going to go listen to mclemore. >> we'll be thrift shopping along the way. >> that works. >> tina, thank you for coming in. tina amini. >> pop some tags. >> that's right. "south park" has not been afraid to pull any punches, and last night, set its sights squarely on microsoft, i should say. we'll show you what we're talking about with regard to "south park" when we come back. the ocean gets warmer. the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy.
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♪ yeah, you're going to be hearing some of that tonight as the console wars escalate. it seems someone has been caught in the crossfire, in cartoon form. "south park" tackled the upcoming launch in its latest episode, and things got messy between bill gates and steve ballmer. if you have small children, you might want to ask them to look away. check it out. >> you know, when i stepped down and left you in charge of the
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company, steve, i knew there might be challenges for you. >> yeah, well, nothing i can't handle. there might be changes we need to make to the marketing, but i'm optimistic. >> uh-huh. >> i think we'll sell the number of units we want to. >> you're right, steve. some changes do need to be made. >> ahhh! [ gasping ] >> so graphic. >> we want to know did last night "south park" sponsored by the new microsoft xbox one, how's that for meta? >> at least he didn't stab him in the back, right? [ laughter ] >> i guess that's true. >> it's met faphoricmetaphorica? >> yeah, it's essentially making fun of the data collection. >> absolutely. they can't complain. and interestingly, i'd bet "south park's" audience is squarely the same audience that's probably going to be in line for either the xbox one or the ps4. >> sure. >> so, hey, it's a joke.
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really, in reality, ballmer's not in trouble for the xbox. i mean, that's gone pretty well. >> yeah. >> it's some of the other stuff. it's mobile. >> yeah, bing might be a different story. interesting, cultural relevance. when you're on "south park," you have it, for sure. >> not bad to remind people the night before the launch. >> right. david einhorn with wapner on "halftime," starting now. all right, guys, thank you so much. welcome to a special edition of "halftime report." we're live today from the robin hood investors conference in new york city where some of the world's greatest investors are gathered to share their ideas and most importantly to help fight poverty in new york city. in just a short while, we're going to speak exclusively to one of the hedge fund heavyweights in this building -- david einhorn of greenlight capital. david will join us to reveal what his latest best idea is, the one he unveiled in private a short time ago. i'm also joined by the "halftime" traders, anthony


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